Heroes of Democracy

The WSJ has a fun piece today on the travails of being a poll worker in India.  The country has a rule that there must be a poll station no further than 2 km from every residential community, which means that the polling agents assigned to rural areas have their work cut out for them.

The US Postal Service has the motto “Neither snow, nor rain, nor heat, nor gloom of night, stays these couriers from the swift completion of their appointed round” but that’s nothing compared to what these poor guys face. They should come up with a similar motto including crocodiles, snakes, elephants, mountains, and crushing heat.

Here are some details of the trials they face:

“There are basically two ways to get to Hanspuri (a town with 261 voters). Going overland would require hacking through dense jungle filled with snakes and across the mountain ridges that serrate North Andaman island—all while carrying the polling machines and other equipment in backpacks. The more practical water route—through the mangrove forests and up the coast—has its own risks, among them: hungry crocodiles and the risk of capsizing.”

Poll workers travel with camel caravans to reach settlements in the deserts of Rajasthan.

Election officials recently had to contend with a herd of wild elephants that blocked the way to two polling stations. Eventually, forest rangers came to the rescue.

Polling officials trekked five hours through a forest carrying a 10-plus-pound polling machine to reach a settlement with just two voters near the Chinese border.

Phase two of the journey required lugging the two voting machines—a precaution in case one malfunctioned—as well as water, food and camping gear to the village. On sections of the path, the poll workers and their escorts had to walk in single file over makeshift bridges roughly the width of gymnastics balance beams.”

Click here for a slideshow of some these obstacles.

Of the 261 voters in Hanspuri, roughly 80% voted.  While that’s a pretty high turnout, if I were that poll worker who took days to trek there, I would be plenty hacked at those who didn’t vote.

Import Substitution Fishing?

In the department of “what could go wrong?”, the Nigerian government has embarked on a new plan to promote fish farming by slapping import quotas on foreign fish (that’s a funny concept, as if the fish in Nigerian waters carry (waterproof) citizenship papers)).

So what are the details of this creative new plan for growth?  The Ministry of Agriculture first sought to ban all fish imports for four years and force fish importers to start fish farms.  This brilliant nugget was shot down by public outcry, who rightly realized that there would be massive fish shortages.  Somehow the government thinks that the skills needed for import-export are the same for fish farming.  I don’t know what exactly each of those jobs entails, but it doesn’t strike me as likely that the same person would be equally well suited for both.

Alright, back to the drawing board.  The Minister then decided on a 25% annual reduction in fish imports, using foreign exchange as a control mechanism. Foreign exchange is already regulated by the Nigerian authorities and fish importers have already learned to game the system; that is, claim to be importing way more fish than they actually are and resell the foreign exchange on the black market.

The article does a good job of summing up other reasons the policy is likely to fail:

“The Nigeria Agriculture Minister has said, “In 2013, a total of 3.6 million juveniles, 36,000 bags of 15 kilograms of feed and 200 water testing kits were provided to fishermen in ten states, at a total cost of N1.5 billion Naira.” While many fish farmers indicate they are yet to see and/or get these items, market analysts state that these are grossly inadequate to make any impact on boosting production to cover the import cut.

Nigeria’s marine waters are also unsafe with serious security challenges which hamper fish and shrimp trawling. Nigeria’s Niger Delta areas used to be the hub of the country’s fishing and fishery production. But that status has been overwritten since Nigeria’s oil and gas discovery in that region. Water pollution from oil and gas exploration activities in the region has continued to deplete the region for fishery activities.”

and I agree completely with their forecast:

“Many industry watchers indicate that Nigeria’s fish quota regime can only increase food inflation and open up channels for profiteering by politically-connected importers and individuals with privileged access to top government officials. This will fuel smuggling and the corruption of port officials, as well as increase the risk of disease in domestic fish farming as pond will be overtaxed as fish farmers try to boost production.”

The real question is if the program’s failure is so easy to predict in advance, why is the government pursuing it?

BRICs are preemies!

In the UK, the percent of the labor force in manufacturing peaked at 45% in 1912. In the US it peaked at 26% or so in the 1950s. In both countries it is now below 10%. Germany peaked around 40% in 1970.

As Dani Rodrik pointed out last year, this path is the historical path to rich country status. Get out of agriculture and into low level manufacturing. Become urbanized, get your kids in school, raise human capital, raise the level of sophistication of your manufactured goods, continue to raise human capital, start innovating and de-industrializing.

Brazil, India & China are not on this path. Their level of industrialization peaked at a fairly low percentage of employment (no more than 15%) and their deindustrialization started when they were much poorer than the countries in my opening graf (they were only around 1/2 to 1/3 as rich).

(all of the above is basically from Rodrik’s excellent piece)

So, the BRICs are definitely preemies! Two interesting questions are (1) why? and (2) can they overcome this and make to the rich country club?

For (1) I’d point to increased globalization and increased automation. Value added in manufacturing does not follow this inverted U pattern, but it’s the mass jobs in manufacturing that seem to have led to the rise of the middle class and the investment in children that raised human capital. Can you think of other reasons?

For (2), I hate to say this, but I don’t think so. China and India have over a billion people, and for the life of me, I don’t see where they are ever going to find good jobs for all of them (I know, babies and grannies don’t work)!

In a country like the US I can see how low labor force participation could coexist with good living standards and happiness for “all”, in the sense that there will be enough $$ to cover everyone. But I don’t see how the semi-singularity of the rise of the machines is going to be a picnic for India or China. In an increasingly winner-take-all global economy, being competent at something is going to get you your ass kicked. India and China are not really the best at anything and unlikely to produce as much surplus with their global “winners” as the US or Germany or even South Korea.

 

Will manufacturing ever boom in Sub-Saharan Africa?

We observe that in recent decades, manufacturing jobs have moved around the world looking for spots that minimize costs. From the US to say South Korea, then to China, and now to Vietnam and others.

Will African countries be next? Well, a recent working paper from the Center for Global Development suggests that one factor standing in the way is comparatively high labor costs in SSA.

Here’s the “money shot” from the paper:

Image

Now, those lines might look close to each other, but the chart is in a log scale so the gaps are pretty large. At around $4000 value added per worker, the gap is about 50%!

At this rate, it’s not going to be the lure of cheap labor that will draw global manufacturing to SSA.

PS: the paper uses, 

 “comparable, cross-sectional data from 10,502 manufacturing firms in 12 Sub-Saharan African countries (Angola, Ethiopia, Ghana, Kenya, Mali, Mozambique, Nigeria, Senegal, South Africa, Tanzania, Uganda, Zambia) and 13 comparators from four regions (Indonesia, Philippines, Vietnam, Russia, Turkey, Ukraine, Argentina, Brazil, Chile, Colombia, Mexico, Uruguay, and Bangladesh).”

 

“He was spotted dressed as a moron in Nairobi”

swedish_masai

Thanks to Africa Is a Country for the laugh.  The caption states that “A tourist from Sweden, a Mr. X, has fallen in love with Kenya and the Masai culture. He was spotted dressed like a moran as he went about his business in Nairobi on Wednesday.”

Makes me wonder what that “business” may be…

Update: many angry tweeters have taken me to task for interpreting “moran” to mean “moron.”  Apparently moran means warrior in the Masai language.  Be that as it may, I think my original title still pretty much sums up the situation.

How many Mexicos are there?

According to McKinsey, there are two! One growing and one stagnating:

 

Image

 

The productivity of small firms is falling, while that of large firms is rising. In itself this would not necessarily be terrible, but the size of the large firm sector is not growing much, so around 40% of workers are “stuck” in the falling productivity sector.

Maybe this is just Baumol, and the small firms are all string quartets, but maybe this is a real problem for the country.

Of course, this is just accounting so there’s no guarantee that if the share of workers in the more productive sector doubled, that productivity in that sector would continue to be high. That is to say, there may be a “supply of qualified workers” constraint operating in the country.

How many Mexicos do you think there are?